2025 COLA Increase Forecast: Potential Impact on Medicare

The Senior Citizens League predicts a significant increase in the Social Security COLA to 3.2% in 2025, despite the average cost-of-living adjustment remaining at 2.6% over the past two decades.

2025 COLA Increase Forecast: The Senior Citizens League has reported that the average cost-of-living adjustment (COLA) has been approximately 2.6% over the past two decades. On the other hand, there is a potential for a substantial increase in the Social Security COLA to 3.2% in 2025.

Former Senior Citizens League analyst and independent Social Security and Medicare expert Mary Johnson makes this estimate. A 3% COLA increase was expected for 2025, but current data suggests a higher rate. The 2025 COLA will be released in October.

COLA prioritizes urban non-retirees’ transportation, food, and clothes costs based on the consumer-price index for urban workers. The latest CPI report shows that consumer prices rose in April despite a drop in inflation. Johnson highlighted that rising inflation indicates consumers’ declining purchasing power.

Older individuals are particularly affected by the increasing expenses associated with housing or shelter, electricity, and home care. Johnson emphasized that housing accounts for approximately 50% of the budget for retired and disabled Americans. Consequently, a 5.5% increase in shelter costs is particularly difficult. Additionally, she observed that seniors continue to experience substantial anxiety regarding food prices. Furthermore, the expense of outpatient services, car insurance, and repairs has increased.

2025 COLA Projection: Anticipating the Size and Impact of the Next COLA Increase

Analyst predicts higher-than-expected 3.2% Social Security COLA

These expense hikes have outpaced the 3.2% COLA rise for 2024, making it hard for seniors to stay current. The COLA is not a raise, but it adjusts for inflation and can help the 67 million Social Security retirees.

In its last report, the Social Security and Medicare Board of Trustees warned of Social Security’s impending insolvency.

The anticipated 3.2% COLA increase in 2025 illustrates older people’s struggle to maintain their standard of living amid rising costs. Mary Johnson said, “The higher inflation indicates that consumers are still experiencing an erosion in buying power,” stressing the need for Social Security reforms.

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